In the last few years getting personal finance has become very easy. If you need money, you are no longer expected to visit the bank branch and wait in a long cue to submit your loan application. The documentation process can be completed online and in the case of most lenders, the entire process is made simple and hassle-free. Also, you need to have a carefully devised repayment plan in place. You need to be aware of your monthly outgo as well as how it is likely to be over the duration of your personal loan. For smooth repayments you have an online personal loan EMI calculator, this will help you get an estimate of your loan EMIs and the loan amount you are likely to afford. The loan calculator uses different loan amounts, repayment tenures, and interest rates to calculate the monthly instalment. Let’s have a look at simple ways through which an EMI calculator can help you manage your loan:
- Get an Estimated Amount
The actual cost of getting a personal loan is based on the interest rate you are expected to repay towards the loan. The online personal loan EMI calculator helps you understand how much your EMI will be, the interest component of your loan, as well as the total payment due by the end of your repayment tenure. You just need to provide basic information in the calculator such as the interest rate and loan tenure and you will get the results instantly. When you apply for a Bajaj Finserv Personal Loan you also get access to their online EMI calculator that shows you easy-to-understand data to explain this.
- Understand your Repayment Schedule
Once you enter the expected loan amount, interest rate and tenure of the loan. The personal loan EMI calculator should show you the breakup of EMI along with the loan repayment schedule over the complete tenure of the loan. With the help of this information, you will be able to manage your loan repayment over the coming months and give you an understanding of your requirements and manage your finances accordingly.
- Provide you with a Suitable Loan Amount and Tenure
The best part of using an online EMI calculator is it gives you access to easily make changes to the loan principal and tenure to arrive at the right EMI that works for you. Larger loan amounts mean higher EMIs and interest payment and a small loan amount will have shorter EMIs and low interest charges. The loan tenure, on the other hand, impacts your numbers inversely. So, if you are looking to minimize your total interest payable, you can reduce your loan duration. As long as the EMIs can be paid conveniently, you are good.
Calculating Loan EMI
EMI (Equated monthly instalment) is the monthly amount of payments that is to be repaid by the borrower towards the borrowed loan amount. Loan EMI comprises of two components:
-The principal amount repaid
-The interest paid.
The three important factors for Personal loan EMI are as follows
1) Loan Amount: The total amount that has been lent to a borrower.
2) Loan Interest rate: The rate of interest charged on the amount borrowed.
3) Loan Tenure: It is an agreed-upon duration for loan repayment between the borrower and the lender.
How to use the EMI calculator?
To use the EMI calculator, you can simply use the sliders displayed on the screen. The slider will help provide basic details like the loan amount, tenure, and the interest rate to estimate the monthly instalment. If you want to make changes in the loan amount you can do so until you reach the optimal loan EMI you find convenient to pay. The calculator provides an estimated amount based on the loan amount and tenure set by you. It will help identify the amount you need and the EMI that is to be paid towards the loan. You will be able to plan out borrowing decisions on your loan.
Personal Loan EMI Formula
Most lending institutions have the same standardised method to accurately calculate the exact amount you’d need to pay as EMI against your loan. An online personal loan EMI calculator can provide you with instant results in a matter of seconds.
This is the formula to calculate EMI for Personal Loan
EMI = [P x R x (1+R) ^N]/ [(1+R) ^ (N-1)]
This EMI calculator formula can be used to obtain the EMI for any loan amount.
For example, Mr X plans to avail a loan amount of Rs. 10 Lakhs for a tenure of 5 years at an annual interest rate of 12%. The EMI payable can be calculated using the above-mentioned formula.
Based on the following example, the EMI amount is Rs. 22,520
Total interest payable is Rs.3,28,696
Total Payment (Principle + Interest) is Rs.13,28,696